Warnborough v Garmite [2003] EWCA Civ 1544

Written By Nicolas Heyes

Court of Appeal

Basic Facts : The dispute centered on the validity of two options for purchasing real property. Parties involved were the claimant Wanrnborough Ltd and the defendant Garnite Ltd. Warnborough Ltd was given options to purchase property in the context of a sale and loan arrangement.

Issue for the Court: Whether options to purchase constitute a clog on the equity of redemption.

Held: The court ruled that a transaction appearing as a sale might be construed as a mortgage if it was designed to secure a debt.

Parker LJ

  • The clog and fetter rule applies if the transaction resembles a mortgage.

  • Options are enforceable if they are part of a sale rather than a loan.

Nicolas Heyes
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